Correlation Between IoTeX Network and Wells Fargo

Can any of the company-specific risk be diversified away by investing in both IoTeX Network and Wells Fargo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IoTeX Network and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IoTeX Network and Wells Fargo Endeavor, you can compare the effects of market volatilities on IoTeX Network and Wells Fargo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IoTeX Network with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of IoTeX Network and Wells Fargo.

Diversification Opportunities for IoTeX Network and Wells Fargo

0.81

Correlation Coefficient

IoTeX Network  Wells Fargo

Very poor diversification

The 3 months correlation between IoTeX and Wells is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding IoTeX Network and Wells Fargo Endeavor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Endeavor and IoTeX Network is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on IoTeX Network are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Endeavor has no effect on the direction of IoTeX Network i.e., IoTeX Network and Wells Fargo go up and down completely randomly.

Pair Corralation between IoTeX Network and Wells Fargo

Assuming the 90 days trading horizon IoTeX Network is expected to generate 9.34 times more return on investment than Wells Fargo. However, IoTeX Network is 9.34 times more volatile than Wells Fargo Endeavor. It trades about 0.02 of its potential returns per unit of risk. Wells Fargo Endeavor is currently generating about -0.01 per unit of risk. If you would invest  5.93  in IoTeX Network on January 20, 2024 and sell it today you would lose (0.45) from holding IoTeX Network or give up 7.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.56%
Values	Daily Returns

IoTeX Network  vs.  Wells Fargo Endeavor

IoTeX Network

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IoTeX Network are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, IoTeX Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Wells Fargo Endeavor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Endeavor are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IoTeX Network and Wells Fargo

The main advantage of trading using opposite IoTeX Network and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IoTeX Network position performs unexpectedly, Wells Fargo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wells Fargo will offset losses from the drop in Wells Fargo's long position.

The idea behind IoTeX Network and Wells Fargo Endeavor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.